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2022 (8) TMI 955 - AT - Income TaxAddition u/s 69C - payment of License Fee - explanation of the assessee that net sale after deducting License Fee paid was recorded in the books - HELD THAT:- In the present case, for the year under consideration the assessee instead of debiting the License Fee in the purchase account reduced it from the sales as such the impact on the profitability was NIL because the License Fee if not reduced from the sales then the figure of the sales account will increase with the same amount of the License Fee which was to be debited separately under the head License Fee in the Trading and P&L Account. When the AO has accepted the gross sales reflected by the assessee in its ledger account and also not doubted the License Fee shown in the ledger account, there was no occasion to deny the benefit of the payment of License Fee which was reduced from the gross sales by the assessee. In that view of the matter we do not see any justification on the part of the Ld. CIT(A) in sustaining the addition made by the AO. Accordingly the same is deleted. Disallowance on account of possible leakage in the revenue out of the various expenses - HELD THAT:- In the present case it is noticed that the AO disallowed the expenses under the head Wages, Salary, Welfare expenses, Travelling expenses, Misc expenses and Telephone expenses totaling to Rs. 1040710/-. He disallowed 1/5th of the said expenses. However no specific defect was pointed out to substantiate that a particular expense was incurred for non business purposes. CIT(A) also sustained the disallowance of Rs. 1,00,000/- without pointing out any specific instance where the expenses were not incurred for the business purposes. At the same time, some of the expenses were unvouched and in such type of cases personal use out of Travelling, Telephone, Welfare expenses and Misc. expenses cannot be ruled out. The assessee incurred the expenses under these heads amounting to Rs. 27200/-, Rs. 32150/-, Rs. 68520/- and Rs, 35940/- totaling to Rs. 1,63,810/-. We therefore in order to cover any possible leakage in the revenue and to meet the ends of justice deem it appropriate to sustain the disallowance of Rs. 50,000/- out of the aforesaid expenses. Accordingly the assessee will get further relief of Rs. 50,000/-. Appeal of assessee partly allowed.
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